for Startups,Inc. Q1 FY2026 earnings call

Overall Financial Result

• Achieved record highest quarterly performance, with 28.9% YoY revenue growth to 1.116 billion yen, and 168.8% YoY operating profit growth to 0.212 billion yen. Total consolidated orders grew 18.6% YoY to 1.356 billion yen.
• Profit margin improved driven by the high-gross-margin Human Capital Business, and the absence of one-time office relocation costs that hit the prior period, offsetting current period incremental expense.

Segment Reporting Change

• Changed segment reporting from two segments (Talent Agency & Open Innovation, Venture Capital) to three segments (Human Capital, Open Innovation, Venture Capital), following Open Innovation's achievement of sustained profitability and clear growth outlook, to improve transparency for investors.

Mid-term Strategy: "Growth Industry Support Platform"

• The three core strategic pillars are: (1) Become the No.1 startup HR service in both quality and volume, (2) Expand startup support service offerings, (3) Grow scale via M&A and co-creation ventures.
• Current progress: 1. Human Capital: Shifted focus from quality-only to volume expansion while maintaining quality, delivering strong order and revenue growth, though productivity improvement remains a key opportunity. 2. New business: Launched startup M&A intermediary services in partnership with Strike, which is a shareholder and capital alliance partner; Strike will handle execution initially while For Startups builds internal execution capability. 3. First co-creation venture: Carved out GO Job from GO Inc. and turned it into an equity-method affiliate; GO Job is a recruitment platform for taxi drivers, with plans to expand into logistics, construction and other essential worker verticals.

External Market Adaptation

• Shifted core focus from SaaS startups to deep tech startups in response to funding market changes, aligned with growing government grant support for deep tech. The Tokyo Pro Grow Market's new 10 billion yen listing requirement is viewed as a net positive, as it accelerates startup demand for talent investment and M&A rollups that For Startups can support.

1. Human Capital Business: Revenue of 1.016 billion yen, 24.7% YoY growth, accounting for 91% of total consolidated revenue. Orders reached 1.0+ billion yen, 23.6% YoY growth, marking the first time both revenue and orders exceeded 10 billion yen for the segment in a single quarter. Hires through success-fee recruitment hit 239 (over 200 for the first time), with average fee per hire increasing rather than declining as expected. New candidate interviews increased 83.7% YoY, while the number of unique candidates progressing to client interviews grew 22.9% YoY.
2. Open Innovation Business: Revenue of 0.10 billion yen, 91.3% YoY growth. Orders grew 1.1% YoY. Strong performance from Public Affairs (already hit full-year annual order target, with revenue recognition timing pending) and STARTUP DB (sales and orders grew strongly, exceeding initial targets leading to an upward target revision). Revenue is seasonally concentrated in the second half of the fiscal year, with conference revenue recognized in Q3 and Public Affairs revenue recognized in Q4.
3. Venture Capital Business: Added new investment in space startup Iwatani Giken (balloon travel business) as of end-June 2025, bringing total portfolio companies to 10.

• Management maintains the full-year FY2026 March term guidance of 4.3 billion yen in total revenue and 0.65 billion yen in operating profit, with no upward or downward revision at this time. Management will review guidance after tracking ongoing order and revenue trends.
• The strong Q1 performance puts full-year profit and revenue progress above the 25% expected quarterly progress rate, and the 2027 FY term target could be achieved one year ahead of schedule if current momentum continues. Management is focused on exceeding the stated FY2026 full-year targets.

• Startup funding market growth has stagnated at around 1 trillion yen annually, creating some minor negative impact on For Startups' business.
• In Human Capital, while new candidate interviews have grown sharply, conversion to client interviews has only grown 22.9% YoY, indicating untapped productivity improvement that requires additional effort to boost conversion by increasing attractive client job openings.
• Generative AI is expected to drive large-scale white-collar workforce restructuring in Japan, similar to trends already seen in the US, which creates market uncertainty, though management views this shift as an opportunity for its essential worker recruitment venture GO Job.

Q: Why did For Startups increase its stake in GO Job to make it an equity-method affiliate, and what does management mean by "co-creation venture"? / A: For Startups has an existing long relationship with GO Inc., having placed over 100 senior and business talent for GO's growth. Management expects generative AI to drive white-collar layoffs in Japan, which will push displaced workers to shift into understaffed essential worker sectors like driving and construction, a shift the Japanese government will also support. For Startups defines co-creation as its hybrid capital model of investing both talent and capital to build value with new ventures, with GO Job as the first example of this model, which has strong potential for future IPO or M&A exit.

Q: Despite the seemingly negative backdrop of the stagnant startup funding market and the Tokyo Pro Grow Market 10 billion yen listing requirement, For Startups has outperformed growth expectations. What is management's view on current market conditions? / A: Startup funding growth has stagnated around 1 trillion yen annually, but there are emerging positive signals: major Japanese megabanks are setting up direct investment teams for large secondary market investments, which will likely trigger follow-on investment from regional banks and major industrial corporates. While SaaS remains challenging, government grant funding for deep tech is growing strongly. The new listing requirement will accelerate M&A and secondary activity, including deals between large corporates and startups, and startup acqui-hires, which For Startups is well positioned to capture by building out its startup M&A service offering alongside its existing strong HR brand.

Q: What is the current outlook for the Open Innovation Business, given strong Q1 profit progress that already exceeds 30% of full-year guidance, and what upside exists for full-year results? / A: Open Innovation revenue is heavily seasonally concentrated in the second half, with most conference and Public Affairs revenue recognized in Q3 and Q4. The segment's underlying momentum is very strong, with Public Affairs already hitting its full-year order target and STARTUP DB exceeding its initial sales targets, so there is clear upside to full-year profit if current trends continue, aligned with the overall strong Q1 momentum across the business.